The holidays are over, the visiting relatives safely on their way and the Indianapolis Colts . . . well, let's just say I won't be distracted too much by football the next eight months. So, I am back at it.

Over the next few days, I'll be posting about recent and expected changes in the real estate closing and title insurance world. Today, let's wrap up the most significant industry consolidation in the history of title insurance.

Lawyers Title & Commonwealth Title sold to Fidelity

Just before Christmas, Fidelity completed their acquisition of Lawyers Title and Commonwealth Title from the bankrupt LandAmerica. Matt Carter at Inman Real Estate News wrote several great articles if you want gory details. I come away with two lasting impressions of this debacle.

The failure of LandAmerica underscores the importance of carefully managing OPM (other people's money). LandAmerica's 1031 Tax Deferred business invested client assets in high yielding auction rate securities. When that market collapsed early last year, LandAmerica lost access to their client's money and eventually lost control of their company. The desire to skim a little extra income off OPM, led to the near bankruptcy of two of the oldest title insurers in the country. The irony here is that title underwriters, and many state regulators, rightfully require title agents to apply a higher standard of care to OPM than to the agent's own money. LandAmerica stupidly refused to accept that same standard themselves and paid the ultimate price.

The resulting concentration of 75 percent of the national title distribution system in just two companies, Fidelity and First American, bears close scrutiny as the consolidation plays out. Will these two companies, both sharing the goal of improving profitability, be able to dictate pricing and service levels to their clients without fear of a competitive environment? How will these companies use this market position to leverage new regulatory rules to their advantage? If this business combination becomes abusive, I will not be surprised to see the FTC revisit the situation in a few years.

All in all, a sorry situation that did not need to happen.

Stop back in a couple of days to learn about how falling interest rates and the resulting dramatic increase in title orders may affect your next closing.

Happy New Year and best wishes for a successful 2009!